3^2. 

"A 

Reprinted  from  The  Annals  of  the  American  Academy  of  Political  and  Social  Science, 
Philadelphia,  March,  1921. 

Publication  No.  1500. 

The  Foreign  Trade  of  the  United  States  Since  the 
Signing  of  the  Armistice 

By  Simon  Litman 

Professor  of  Economics,  University  of  Illinois 


THE  abnormal  conditions  resulting 
from  the  War  and  the  slowness 
with  which  the  world  is  recovering 
from  its  saturnalia  of  destruction  are 
clearly  reflected  in  the  foreign  trade  sta¬ 
tistics  of  the  United  States.  Whether 
one  considers  our  foreign  trade 
from  the  angle  of  the  relationship 
between  quantities  and  values  of 
goods  shipped  or  from  that  of  the  ex¬ 
cess  of  exports  over  imports,  whether 
one  views  it  from  the  standpoint  of  the 
character  and  the  direction  of  the 
commodities  moved  or  from  that  of  the 
methods  used  in  financing  shipments, 

I  one  must  conclude  that  the  world  in  its 
industrial  life  is  yet  under  the  shadow 
of  the  Great  War.  The  turbulent 
;  waves  set  into  motion  on  the  seas  of 
I  international  commerce  have  not  yet 
[subsided,  and  the  movement  of  goods 
[and  of  payments  is  yet  far  from  what 
[one  would  expect  it  to  be  in  an  era  of 
peace  and  prosperity  based  upon  an 
[intelligent  utilization  of  the  natural  re¬ 
sources  in  the  various  regions  of  the 
globe. 

B  Four  years  of  exaltation  and  of 
jagony,  of  fear  and  hope,  of  hatred  and 
pevotion,  four  years  of  roaring  cannons 
[and  of  bursting  shrapnel  have  left 
[Europe,  the  main  workshop  of  the 
[world,  wounded,  dazed,  incapable  of 
[quickly  returning  to  the  sustained  effort 
land  the  humdrum  existence  of  mill  and 
factory  towns.  Those  who  expected 
[that  with  Germany’s  acknowledgment 
pf  defeat  a  new  industrial  Europe 
pvould  immediately  emerge  from  the 
ruins  of  the  old  one  proved  poor  econo- 
Inists  and  poorer  psychologists. 


It  is  somewhat  difficult  to  foretell  at 
present  how  soon  a  normal  basis  in  our 
commercial  intercourse  with  foreign 
nations  will  be  reached.  However,  cer¬ 
tain  tendencies  are  beginning  to  mani¬ 
fest  themselves  which  corroborate  the 
contentions  of  those  who  have  been 
pointing  out  the  utterly  artificial  char¬ 
acter  of  our  trade  development  since 
the  memorable  days  of  August,  1914. 

Growth  of  Export  Trade 

The  rapid  growth  in  the  value  of  our 
foreign  commerce  which  commenced 
in  1915  and  continued  through  the  war 
was  not  checked  by  the  cessation  of 
hostilities.  During  the  year  ending 
June  30,  1919,  our  exports  were  val¬ 
ued  at  $7,232,282,000  and  our  imports 
at  $3,095,720,000,  giving  us  a  total  of 
$10,328,002,000  as  contrasted  with  a 
total  tradeof  $8,865,367,000  in  1918  and 
$4,258,505,000  in  1914.  The  excess  of 
exports  over  imports,  the  largest  in  the 
history  of  the  country ,  equalled  $4,136,- 
563,000;  the  excess  in  1918  was  $2,974,- 
056,000  and  in  1914,  $470,653,000. 

One  of  the  main  characteristics  of 
our  trade  in  1920  was  a  rapid  advance 
in  the  value  of  imports;  they  rose  to 
$5,238,622,000,  which  represented  an 
increase  of  $2,142,902,000  over  the 
previous  year.  Exports  rose  during  the 
same  period  to  $8,111,040,000  and  the 
total  trade  to  $13,349,662,000.  Be¬ 
cause  of  a  much  more  rapid  advance  in 
the  value  of  imports  than  of  exports 
our  so-called  “favorable”  balance  of 
trade  declined  to  $2,872,418,000. 

That  the  high  peak  in  our  excess  of 
exports  over  imports  has  been  reached 


1 


2 


The  Annals  of  the  American  Academy 


and  passed  may  be  inferred  from  the 
fact  that  for  eleven  months  ending 
November,  1920,  our  exports  equalled 
$7,508,424,000  and  our  imports  $5,013,- 
299,000.  Preliminary  estimates  of  our 
foreign  trade  for  the  calendar  year  1920 
place  the  exports  at  about  $8,191,000,- 
000  and  the  imports  at  approximately 
$5,468,000,000,  leaving  a  balance  in  our 
favor  equal  to  $2,723,000,000;  the  bal¬ 
ance  of  trade  in  the  calendar  year  1919 
was  $4,016,000,000,  or  48  per  cent 
above  that  of  1920.  This  decline  in 
the  excess  of  exports  over  imports  may 
be  hailed  as  one  of  the  most  satisfac¬ 
tory  developments  in  our  commercial 
relations  with  foreign  countries;  only 
through  such  a  decline,  if  it  is  carried 
far  enough,  shall  we,  as  a  creditor  na¬ 
tion,  be  able  to  place  our  foreign  com¬ 
mercial  intercourse  on  a  sound  busi¬ 
ness  basis. 

A  study  of  our  foreign  trade  by 
groups  according  to  use  and  degree  of 
manufactures  shows  that  finished  prod¬ 
ucts  ready  for  consumption  occupy  at 
present  the  most  prominent  place  in 
our  exports;  the  exports  of  this  group 
advanced  from  $724,908,000  in  1914  to 
$2,384,018,000  in  1919,  and  $2,835,- 
999,000  in  1920;  in  percentages  of  the 
total  the  advance  was  from  31.11  per 
cent  to  33.66  per  cent  and  35.67  per 
cent;  during  the  eleven  months  ending 
November,  1920,  the  exports  of  manu¬ 
factures  ready  for  consumption  rose 
to  $2,898,000,000  or  39.3  per  cent  of 
the  total. 

The  value  of  exported  crude  mate¬ 
rials  for  use  in  manufacturing  ad¬ 
vanced  from  $792,716,000  in  1914  to 
$1,226,486,000  in  1919  and  $1,968,- 
118,000  in  1920.  Crude  materials 
played  a  more  important  role  in  our 
pre-war  exports  than  in  the  exports  of 
1919  or  1920;  they  constituted  34.03 
per  cent  of  the  total  in  1914,  17.32  per 
cent  in  1919  and  24.75  per  cent  in  1920. 

Exports  of  foodstuffs  in  crude  con¬ 


dition  and  food  animals  increased  from 
$137,495,000  or  5.9  per  cent  of  the 
total  in  1914  to  $719,340,000  or  10.16 
per  cent  in  1919;  this  was  followed  by  a 
decline  to  $626,577,000  or  7.88  per 
cent  in  1920;  during  the  eleven  months 
ending  November,  1920,  the  exports  in 
this  group  advanced  to  $826,000,000  or 
11.2  per  cent.  The.  sharp  advance  in 
the  exports  of  foodstuffs,  partly  or 
wholly  manufactured,  carried  the  fig¬ 
ures  from  $293,218,000  or  12.59  per 
cent  of  the  total  in  1914  to  $1,783,567,- 
000  or  25.19  per  cent  in  1919  and 
$1,514,616,000  or  19.05  per  cent  in 
1920;  a  considerable  decline  took  place 
during  the  eleven  months  ending  No¬ 
vember,  1920,  which  brought  down  the 
exports  to  $1,028,000,000  or  13.9  per 
cent. 

Manufactures  for  further  use  in 
manufacturing  advanced  from  $374,- 
224,000  in  1914  to  $953,036,000  in 
1919  arid  $991,921,000  in  1920;  they 
constituted  16.06  per  cent  of  total  ex¬ 
ports  in  1914,  13.46  per  cent  in  1919 
and  12.48  per  cent  in  1920;  during  the 
eleven  months  ending  November,  1920, 
the  exports  in  this  group  declined  to 
$888,000,000  or  12.1  per  cent. 

United  States’  Imports 

Turning  to  imports,  one  finds  that 
crude  materials  for  use  in  manufactur¬ 
ing  advanced  from  $632,866,000  or 
33.42  per  cent  in  1914,  to  $1,250,711,- 
000  or  40.4  per  cent  in  1919  and  $2,141,- 
645,000  or  40.89  per  cent  in  1920; 
the  imports  in  this  group  declined  to 
$1,684,000,000  or  33.6  per  cent  during 
the  eleven  months  ending  November, 
1920. 

Imports  of  foodstuffs  in  crude  con¬ 
dition  and  food  animals  rose  from 
$247,947,000  in  1914  to  $376,223,000  in 
1919  and  to  $622,440,000  in  1920;  there 
was  a  slight  decline  in  the  relative  im¬ 
portance  of  this  group ;  it  dropped  from 
13.09  per  cent  in  1914  to  12.15  per 


Foreign  Trade  of  the  United  States 


3 


cent  in  1919  and  11.88  per  cent  in 
1920;  the  decline  continued  through  the 
calendar  year  of  1920,  bringing  down 
the  absolute  figures  for  eleven  months 
ending  with  November  to  $535,000,000 
and  the  percentage  of  the  total  to  10.7. 
A  marked  increase  took  place  in  the 
value  of  our  imports  of  foodstuffs 
partly  or  wholly  manufactured;  the  ad¬ 
vance  carried  the  value  from  $227,644,- 
000  or  12.02  per  cent  in  1914  to 
$456,237,000  or  14.74  per  cent  in  1919, 
$891,336,000  or  17.02  per  cent  in  1920 
and  $1,185,000,000  or  23.6  per  cent  for 
the  eleven  months  ending  November, 
1920.  Our  imported  foodstuffs  include 
such  commodities  as  tea,  coffee,  cocoa, 
sugar,  bananas,  pineapple,  cocoanuts, 
sago  and  tapioca.  While  these  foods 
can  not  be  considered  as  essential  to 
our  existence,  they  have  become  just  as 
indispensable  in  the  daily  diet  of  our 
people  as  rubber,  jute,  raw  silk  and 
many  other  tropical  products  have  be¬ 
come  indispensable  in  our  industries. 
We  are  likely  to  increase  our  domestic 
supply  of  some  of  these  commodities 
but,  largely  because  of  lack  of  a  suita¬ 
ble  climate,  we  shall  continue  to  draw 
upon  the  tropics  for  them. 

The  imports  of  manufactures  for  fur¬ 
ther  use  in  manufacturing  grew  from 
$319,275,000  or  18.86  per  cent  of  the 
total  in  1914  to  $605,806,000  or  19.57 
per  cent  in  1919  and  $800,713,000  or 
15.28  per  cent  in  1-920.  Imports  of 
manufactures  ready  for  consumption 
were  affected  by  a  disorganization  of 
European  industries.  In  1914,  im¬ 
ported  manufactures  were  valued  at 
$449,318,000  and  constituted  23.72  per 
cent  of  our  total  imports;  in  1919,  their 
value  was  $393,223,000  or  12.7  per 
cent.  The  gradual  recuperation  of 
Europe  is  indicated  by  the  rise  of  our 
imports  in  this  group  to  $745,126,000 
or  14.22  per  cent  in  1920,  and  to  $821,- 
000,000  or  16.4  per  cent  for  eleven 
months  ending  November,  1920. 


Shipments  of  War  Supplies 
Decline 

With  the  signing  of  the  armistice 
came  a  marked  decline  in  our  ship¬ 
ments  of  war  supplies;  thus,  the  exports 
of  refined  copper  fell  from  $235,000,000 
in  1918  to  $118,000,000  in  1919,  the 
exports  of  steel  billets  from  $165,000,- 
000  in  1918  to  $77,000,000  in  1919,  the 
exports  of  explosives  from  $373,890,000 
in  1918  to  $122,731,000  in  1919. 

The  decline  of  our  shipments  of  war 
supplies  was  more  than  counterbal¬ 
anced  by  a  rapid  rise  in  our  shipments 
of  foodstuffs  and  raw  materials  to  the 
devastated  countries  of  Europe.  While 
in  November,  1918,  we  exported  to 
Europe  goods  valued  at  $297,363,000, 
by  January,  1919,  exports  to  that  con¬ 
tinent  rose  to  $370,479,000,  and  by 
June  of  the  same  year  to  $644,604,000. 
Europe  was  clamoring  for  our  goods 
and  was  willing  to  pay  any  price  for 
them  as  long  as  we  were  willing  to  ex¬ 
tend  her  credits.  Shipments  to  Europe 
were  stimulated  partly  by  our  desire  to 
feed  the  hungry  and  to  help  the  allies  in 
their  work  of  reconstruction  and  partly 
by  large  profits  which  we  were  making 
on  our  sales.  These  increased  ship¬ 
ments  after  the  cessation  of  hostilities 
were  made  possible  by  the  discontinu¬ 
ance  or  modification  of  war-time  re¬ 
strictions  on  trade  and  by  the  release  of 
a  large  amount  of  shipping  space  pre¬ 
viously  employed  by  the  military 
forces.  Our  total  exports  to  Europe 
rose  from  $3,732,174,000  in  1918  to 
$4,644,937,000  in  1919,  most  of  the  in¬ 
crease  having  occurred  since  the  armis¬ 
tice.  European  demand  continued  un¬ 
abated  throughout  1920,  our  exports 
in  that  year  having  reached  the  figure 
of  $4,864,155,000.  These  are  figures 
for  the  fiscal  year. 

A  material  falling  off  in  our  exports 
to  Europe  took  place  during  the  eleven 
months  ending  November,  1920;  the 
decline  brought  our  exports  down  to 


4 


The  Annals  of  the  American  Academy 


$4,078,584,000,  as  contrasted  with 
$4,765,537,000  for  the  eleven  months 
ending  November,  1919.  One  of  the 
reasons  for  this  decline  was  a  marked 
falling  off  in  our  exports  of  meat  and 
dairy  products,  Europe  beginning  to 
draw  more  and  more  upon  her  own  re¬ 
sources  and  upon  countries  other  than 
the  United  States.  During  the  eleven 
months  ending  November,  1919,  our 
shipments  of  meat  and  dairy  products 
were  valued  at  $1,044,083,000,  while 
during  the  same  period  in  1920  we  ex¬ 
ported  these  products  only  to  the  ex¬ 
tent  of  $491,107,000;  this  represents  a 
decline  of  55  per  cent.  The  gradual  re¬ 
cuperation  of  Europe  is  also  indicated 
by  the  falling  off  in  the  value  of  our 
exports  of  finished  commodities,  espe¬ 
cially  consumers’  goods,  in  favor  of 
raw  materials,  partly  manufactured 
goods,  and  finished  producers’  goods, 
such  commodities  as  tools,  implements, 
machinery,  mineral  oil,  etc. 

The  rise  in  the  value  of  our  imports 
from  Europe  after  the  signing  of  the 
armistice  was  slight  at  first.  Imports 
increased  from  $20,418,000  in  Novem¬ 
ber,  1918,  to  $21,816,000  in  January, 
1919,  and  to  $53,385,000  in  June  of  the 
same  year.  Total  imports  from  Europe 
declined  from  $895,603,000  in  1914  to 
$411,578,000  in  1918  and  $372,957,000 
in  1919;  in  1920  they  advanced  to 
$1,179,461,000  or  more  than  triple  the 
imports  for  the  previous  year;  for  the 
eleven  months  ending  November,  1920, 
our  receipts  from  Europe  equalled 
$1,160,414,000.  In  connection  with 
the  increase  of  importations  from 
Europe  it  is  worth  while  to  note  that  a 
part  of  this  increase  has  been  due  not 
to  the  reestablishment  of  European  in¬ 
dustries  but  to  the  resumption  of  Brit¬ 
ish  merchandising  activities,  England 
rapidly  regaining  her  former  position  as 
an  intermediary;  thus,  out  of  $524,- 
021,000  of  goods  which  came  to  us  in 
1920  from  the  British  Isles,  about  one- 


half  consisted  of  British  re-exports  of 
such  commodities  as  rubber,  wool,  fur, 
raw  cotton  and  tin. 

Effect  of  War  on  European 
Exports 

The  disastrous  effect  of  the  war  on 
European  exports  to  the  United  States 
may  be  inferred  from  the  fact  that 
while  in  1914  our  imports  from  Europe 
constituted  47.2  per  cent  of  our  total 
imports,  in  1919  they  represented  only 
12.2  per  cent;  and  in  1920  there  was  a 
rise  to  22.6  per  cent.  Europe’s  re¬ 
covery  is  beginning  to  be  felt  in  our 
markets  as  well  as  in  the  other  markets 
of  the  world;  and  in  the  not  too  dis¬ 
tant  future,  European  competition  is 
likely  to  become  an  important  factor  in 
international  commerce. 

The  changes  in  our  exports  and  im¬ 
ports  by  Grand  Divisions,  are  shown 
in  the  accompanying  table. 

The  figures  show  that  outside  of 
Europe  our  best  customers  were  our 
neighbors  of  the  North  American  con¬ 
tinent;  it  is  also  from  them  that  we 
draw  a  great  many  of  our  foreign  sup¬ 
plies.  Our  total  trade  with  North 
America  rose  from  $2,340,728,000  in 
1919  to  $3,122,273,000  in  1920  and 
$3,341,657,000  during  the  eleven 
months  ending  November,  1920.  The 
fall  in  prices  will  doubtless  adversely 
affect  the  value  statistics  of  this  trade  as 
it  will  affect  also  the  value  statistics  of 
our  total  commerce,  but  the  amount  of 
our  imports  and  exports  to  and  from 
Canada,  Cuba  and  Mexico  is  not  likely 
to  decline.  One  of  the  reasons  for  the 
growth  of  this  trade  is  to  be  found  in 
the  recent  investments  of  American 
capital  in  these  countries;  such  invest¬ 
ments  will  not  be  withdrawn;  on  the 
contrary,  they  will,  in  all  probability, 
be  increased. 

The  showing  of  our  trade  with 
South  America  is  not  as  satisfactory  as 
that  with  North  America,  though  a 


Foreign  Trade  of  the  United  States 


5 


Exports 


1914 

1919 

1920 

11  months  ended 
November,  1920 

To 

Europe . 

$1,486,499,000 

528,645,000 

124,540,000 

113,426,000 

83,568,000 

27,902,000 

$4,644,937,000 

1,288,158,000 

400,646,000 

604,721,000 

208,622,000 

85,157,000 

$4,864,155,000 

1,635,813,000 

490,944,000 

798,137,000 

193,235,000 

128,756,000 

$4,078,584,000 

1,767,391,000 

556,614,000 

716,788,000 

239,977,000 

149,070,000 

North  America . 

South  America . 

Asia . 

Oceania . 

Africa . 

Imports 


From 

Europe . 

$895,603,000 

$372,954,000 

$1,179,461,000 

$1,160,414,000 

North  America . 

427,399,000 

1,052,570,000 

1,486,460,000 

1,574,266,000 

South  America . 

222,677,000 

568,375,000 

860,944,000 

725,138,000 

Asia . 

286,952,000 

830,904,000 

1,368,699,000 

1,222,898,000 

Oceania . 

42,144,000 

190,008,000 

157,892,000 

183,758,000 

Africa . 

19,149,000 

81,066,000 

185,196,000 

146,828,000 

certain  improvement  is  noticeable  for 
the  calendar  year  1920;  our  exports  to 
that  continent  advanced  from  $490,- 
944,000  for  the  twelve  months  ending 
June,  1920,  to  $556,614,000  for  the 
eleven  months  ending  November  of  the 
same  year.  We  have  not  developed  the 
markets  of  Argentine,  Brazil,  Peru, 
Chile  and  other  South  American  re¬ 
publics  as  well  as  we  might  have  done 
especially  in  view  of  the  fact  that  our 
imports  from  these  countries  have 
grown  considerably  during  the  past 
few  years;  the  excess  of  our  imports 
over  exports  reached  in  1920  the  sum 
of  $350,000,000.  Neither  have  we  in¬ 
creased  our  exports  to  Asia  in  propor¬ 
tion  to  the  growth  of  our  dependence 
upon  that  continent  for  its  products; 
our  exports  to  Asia  in  1920  were 
$798, 137,000  while  our  imports  equalled 
$1,368,699,000,  representing  an  excess 
of  imports  over  exports  equalling 
$570,562,000.  Thus,  while  we  have 
been  piling  up  enormous  balances  in 
our  favor  in  Europe,  we  have  been  ac¬ 


cumulating  liabilities  in  other  parts  of 
the  world. 

Our  investments  in  Asia  and  South 
America  are  too  small  as  yet  to  view 
the  excess  shipments  as  representing 
payments  of  interest  to  us,  and  while 
some  of  these  shipments  may  have  been 
made  in  fulfilment  of  European  obliga¬ 
tions,  the  proportion  of  such  ship¬ 
ments  was  comparatively  small.  One 
must  not  overlook  the  fact  that  the 
financing  of  American  exports  to 
Europe  by  the  Government  did  not 
end  with  the  war.  At  the  time  of  the 
signing  of  the  armistice  the  credits  ex¬ 
tended  to  the  allies  were  $8,500,000,000 
out  of  $10,000,000,000  appropriated  by 
Congress  for  that  purpose.  The  ex¬ 
tension  of  government  credit  contin¬ 
ued  until  the  total  sum  appropriated 
was  reached.  This  occurred  in  the 
middle  of  1919.  Since  then  private  in¬ 
terests  took  upon  themselves  the  finan¬ 
cing  of  sales.  The  extent  to  which  our 
credits  to  European  customers  have 
been  stretched  may  be  realized  when 


6 


The  Annals  of  the  American  Academy 


one  reflects  that  during  the  two  years 
since  the  termination  of  the  war 
Europe’s  debt  to  us  increased  by  about 
$8,000,000,000,  of  which $3,500,000,000 
represents  a  floating  debt,  largely  open 
book  accounts.  Our  shipments  to 
Europe  have  been  kept  up  month  after 
month  and  year  after  year  without 
any  serious  consideration  of  the  ability 
of  European  purchasers  to  meet  their 
obligations.  We  have  thus  accumu¬ 
lated  a  large  volume  of  book  credits 
with  little  likelihood  of  their  being 
liquidated  within  a  reasonably  near 
future. 

The  abnormal  growth  in  the  value  of 
our  commerce  during  the  war  was  due 
largely  to  a  rise  in  prices.  Measured  in 
terms  of  quantity  our  gains  in  exports 
and  imports  were  considerably  smaller 
than  value  statistics  indicate.  Price 
inflation  continued  after  the  signing  of 
the  armistice,  prices  of  many  commod¬ 
ities  having  risen  above  the  war  level. 
It  is  only  recently  that  price  declines 
have  set  in.  Value  statistics  of  the 
post-war  commerce  of  the  United 
States  are  thus  just  as  misleading  as 
indicators  of  the  actual  movement  of 
goods  as  were  value  statistics  for  the 
years  1915-1918. 

Mr.  O.  P.  Austin  in  the  October, 
1920,  issue  of  The  Americas  compares 
the  quantity  and  value  of  exports  and 
imports  for  1914,  the  fiscal  year  just 
preceding  the  war,  with  1920,  the  first 
year  of  peace.  By  using  those  com¬ 
modities  for  which  both  weight  and 
value  are  stated  in  governmental  re¬ 
turns,  he  arrives  at  the  following  re¬ 
sults:  While  the  weight  of  our  im¬ 
ports  increased  from  34,992,000,000 
pounds  in  1914  to  57,978,000,000 
pounds  in  1920  or  65.6  per  cent,  the 
value  of  these  imports  rose  from 
$1,163,000,000  to  $3,999,000,000  or 
243.9  per  cent;  the  weight  of  exports 
rose  from  110,409,000,000  in  1914  to 
148,693,000,000  in  1920  or  34.6  per 


cent;  the  value  rise  was  from  $1,667,- 
000,000  to  $5,474,000,000  or  225  per 
cent.  If  one  applies  the  1914  prices  to 
1920  quantities,  one  obtains  as  the 
value  of  imports  in  1920,  $1,977,000,000 
and  the  value  of  exports,  $2,308,000,- 
000.  Assuming  that  a  similar  relation 
of  1920  prices  per  unit  of  quantify  oc¬ 
curred  in  those  articles  in  which  weights 
are  not  shown,  Mr.  Austin  arrives  at 
the  conclusion  that  the  total  domestic 
exports  of  1920,  the  value  of  which  was 
$7,950,000,000,  would,  if  stated  in  1914 
prices,  have  amounted  to  only  about 
$3,340,000,000,  and  the  total  imports 
would  have  amounted  at  the  same  val¬ 
uation  to  $2,600,000,000  instead  of 
$5,239,000,000. 

Reasons  for  Our  “Favorable”  Bal¬ 
ance  of  Trade 

Those  who  have  been  viewing  with 
apprehension  our  recent  large  excesses 
of  exports  over  imports  and  who  have 
been  asking  themselves  the  question  as 
to  how  such  excesses  may  be  reduced, 
will  derive  some  comfort  from  the 
knowledge  that  one  of  the  reasons  for 
our  “favorable”  balance  of  trade  may 
be  found  in  the  fact  that  the  rise  in 
prices  of  the  articles  exported  by  us 
was  much  greater  than  the  rise  in 
prices  of  the  articles  imported.  Our 
imports  were  mostly  from  areas  not 
affected  by  the  war  and  they  con¬ 
sisted  mostly  of  commodities  which 
were  not  necessary  for  military  pur¬ 
poses,  while  the  majority  of  our 
exports  were  goods  urgently  needed; 
first,  to  carry  on  the  conflict,  and  then 
to  feed  the  starving  millions  of  Europe 
and  to  assist  in  the  rehabilitation  of 
their  industries. 

Urgency  of  demand,  coupled  with 
limitation  of  supply,  forced  the  prices 
of  our  export  goods  sharply  upwards. 
It  was  only  after  the  signing  of  the 
armistice  that  many  of  the  import 
prices  went  up  anywhere  in  proportion 


The  International  Trade  Situation  in  Canada 


7 


to  the  advance  in  export  prices.  While  prices  and  not  excessive  exports  were 
our  shipments,  especially  those  to  mainly  responsible  for  the  top-heavy 
Europe,  were  large,  it  is  nearer  the  condition  of  our  war  and  post-war 
truth  to  say  that  excessive  export  commerce. 


. 


